LAWRENCE A. FRIEDMAN
Attorney At Law
12 Cushing Dr., Bridgewater, NJ 08807; 908-704-1900
Admitted in NJ, NY & U.S. Tax Court; LL.M. Taxation (NYU)
Certified Elder Law Attorney by A.B.A. accredited National Elder Law Foundation
Former Chair New Jersey State Bar Association Elder Law Section
Paying for Long Term Care: Medicaid & More
© 2003 by Lawrence A. Friedman
Do not rely on this summary alone! It provides only general guidance and may omit rules and
exceptions that affect you. For safety sake, obtain individual legal advice before you act!
Q.- How can an elder lawyer help my family?
A.- As people age, they face many issues involving housing, care, tax, and finances. Making the wrong choices can cost thousands of dollars and forfeit attractive care and housing options. By educating clients on key considerations and reviewing competing proposals, we help families make the right decisions and avoid costly errors. Thus, we evaluate contracts and insurance proposals and draw legal documents ranging from special needs disability trusts to care agreements, and estate plans. To facilitate Medicaid and tax planning and avoid expensive and intrusive court ordered guardianships, we frequently prepare wills, trusts, powers of attorney, health care proxies, and living wills. We review applications and form agreements issued by continuing care retirement communities (CCRC), nursing homes, assisted living providers, and other facilities and negotiate changes to inappropriate and unfair terms.
Q.- What steps should I take when a loved one may need long term care?
A.- Consult an elder law attorney as soon as a loved one becomes unduly frail or forgetful or is diagnosed with a degenerative condition like Parkinson's Disease, Alzheimer's Disease, Dementia, Multiple Sclerosis, or ALS (i.e. Lou Gehrig's Disease). Because Medicare doesn't pay for long term care, our firm helps families meld Medicaid and other available resources to fund nursing home care, assisted living, or care at home without going broke. Although early planning preserves options and maximizes savings, we frequently even save substantial sums for people who have already entered a nursing home. We also help healthy seniors use life estate deeds and other tools to shelter assets should long term care ever be needed. Because Medicaid rules are extremely complex, making gifts or applying for Medicaid before consulting an elder lawyer can substantially reduce potential savings and trigger expensive penalties.
Q.- How much may I give away to children (or others) when seeking Medicaid?
A.- Most gifts temporarily disqualify the donor and spouse for Medicaid, but substantial gifts may be possible with careful Medicaid planning. Some gifts even may be made shortly before an individual qualifies for Medicaid. However, unless gifts comply with complex and arcane Medicaid and tax rules, they can have unintended consequences. For instance, a donor may qualify for Medicaid 3 years after giving away $250,000 or more, but if the gifts are poorly planned, the donor could be denied Medicaid for many more years.
Q.- Why does everyone need a power of attorney that authorizes long term care planning?
A.- To protect savings against long term care costs, you probably must transfer assets, perhaps through gifts. However, if your mental capacity declines, gifts and other transfers may require guardianship and court approval unless you execute before mental acuity dissipates a power of attorney containing custom drafted provisions that facilitate Medicaid planning. Because anyone can have a bad accident, even young people should give power of attorney.
Q.- What's wrong with a generic power of attorney form?
A.- Unfortunately 'form' powers of attorney available from stationery stores, computer programs, and general practice lawyers rarely work in Medicaid and other long term care planning. Even though they may contain broad general language, these forms usually don't authorize gifts to qualify for Medicaid. However, elder law attorneys can draw powers of attorney that are effective in long term care planning but aren't very costly.
Q.- Why are new wills, deeds, and beneficiary designations essential in Medicaid planning?
A.- Because inheritances and other receipts may disqualify an individual for Medicaid and cause recapture of prior government aid, wills, deeds, accounts, and IRA and insurance beneficiary designations generally should be changed when a loved one may need long term care.
Q.- How can I protect the value of my home in case I someday need long term care?
A.- Simply deeding your home to children may jeopardize tax breaks and risk losing your home should a child become disabled, divorce, die, or incur financial difficulties. In contrast, a life estate deed can protect your right to live in your home as well as tax benefits while sheltering the house against long term care costs. Because any legal document affects valuable rights, consult an elder law attorney before signing a life estate deed.
Q.- How can a Special Needs Trust protect government aid for a disabled person?
A.- Anyone who can't support himself due to disabilities may qualify for government aid like Medicaid, SSI, housing subsidies, and free group homes, but most gifts and inheritances (whether outright or in an ordinary trust) will jeopardize eligibility. By establishing a Special Needs Trust now, you can make gifts during your lifetime or by Will to provide for a disabled person without disqualifying him/her for government benefits. You need a Special Needs Trust whenever you wish to provide for a descendant, sibling, spouse, or other loved one who is or may be too disabled to work. Without a Special Needs Trust, your gift substitutes for government funds instead of supplementing government aid.
Lawrence A. Friedman, a former chair of the New Jersey State Bar Association Elder Law Section, practices elder, estate planning, disabilities, and tax law in Bridgewater, NJ. He has been Certified as an Elder Law Attorney by the A.B.A. approved National Elder Law Foundation and frequently lectures for ICLE, National Academy of Elder Law Attorneys, New Jersey State Bar Foundation and other groups. In 1995, Friedman developed Sophisticated Elder Law Concepts for ICLE and has moderated the annual program each year thereafter. Friedman received the NJSBA's Distinguished Legislative Service Award for writing legislation to further special needs trusts in New Jersey. He received his LL.M. in Taxation and J.D. from New York University School of Law.
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